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The original documents are located in Box 6, folder "Peterson Commission Report on
Executive Salaries, January 1-17, 1977" of the White House Special Files Unit Files at the
Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 6 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
one
January 13, 1977
MEMORANDUM FOR:
THE PRESIDENT
FROM:
MIKE DUVAL
SUBJECT:
Telephone Call to President-elect
Carter Concerning Government Salary
Increases.
Attached at TAB A are detailed talking points. The
following is a summary of the points we recommend
be made:
I understand you have seen the salary
levels I expect to recommend. Do you
generally agree?
I intend to link the increases to a
recommendation that each branch adopt
a strengthened code of conduct.
May I state publicly that you concur
with this general approach?
TAB A
THE WHITE HOUSE
WASHINGTON
RECOMMENDED TELEPHONE CALL
FROM: MIKE DUVAL Whe
TO
: Jimmy Carter
SUBJECT
: Executive, Legislative and Judicial pay increases.
PURPOSE
: To receive President-elect Carter's personal support
for your decision to approve significant salary
increases for high officials in all three branches
linked to a commitment to a strengthened code of conduct.
TALKING POINTS
: 1. I have reached some conclusions concerning the
Peterson Commission report on Executive, Legislative
and Judicial Salaries.
I intend to submit my recommendations to the Congress
along with my budget on Monday the 17th. I concur
with the Commission's conclusion that there should be
a substantial salary increase linked to a strengthening
of the code of conduct for all three branches. If
I
make such a recommendation, it will require your support
to be implemented.
2. I'd like to go over some of the specific elements of
the recommendation I intend to make.
First, I believe you have a copy of my proposed salary
increases. I understand that you agree with these
proposed increases. I have now filled out the list
by adding all jobs covered by the Quadrennial Commission
statute. I understand that Bert Lance has advised you
of these additional figures.
[I agree with the Commissions' suggestion that the
Congress deal with the cost of living adjustments
problem in separate legislation. My recommendation
will take no position on this issue.]
Page 2
Second, I am strongly of the opinion that the code
of conduct should be strengthened for all three
branches, particularly the Congress. I intend to
endorse the principles stated in the Peterson Commission
Report such as full public disclosure, rigorous restrictions
on outside income, strict conflict of interest provisions,
and reform of expense allowances.
[NOTE: This list omits post-service employment
rules. The Peterson Report only calls for limitations
on arrangements for post-service employment made while
in public employment and for consistent and explicit
rules among all branches. Carter went beyond this by
proposing what appears to be strict limitations for
two years following government service.]
Because of the principle of separation of powers, I
will recommend that each branch adopt its own rules and
enforcing mechanisms in accordance with the general
principles identified in the Peterson Report.
Third, I believe that the salary increases should be
accepted by the Congress only if there is a firm
commitment to the stronger code of conduct.
[NOTE: We have presented a choice here of how you
recommend that Congress show its commitment: in
Option A Congress commits by not rejecting the raise
and in Option B you ask each House to pass a resolution.
Jack Marsh and Mike Duval favor Option A because the
resolution procedure will be used by opponents of the
pay increase to defeat it and, in any event, Congress
could ignore your recommendation. They cannot ignore
Option A.]
OPTION A
[Accordingly, I intend to state publicly that one or
both Houses of Congress should vote to reject my
recommendations for salary increases unless they are
committed to adopt the new code of conduct within 3
months. That is, the public should take Congressional
acceptance of the increases as evidence of commitment
to the code.]
OR
Page 3
OPTION B
[Accordingly, I will recommend that each House
pass a resolution, before the pay increase takes
effect, expressly commiting to the establishment
of a new code of conduct.]
3. I would like to use the following sentence in my
public statement on this subject:
"I have personally discussed the matter
with President-elect Carter and he supports
my recommendations concerning salary levels and
the need for stronger codes of conduct for all
three branches."
THE WHITE HOUSE
WASHINGTON
January 13, 1977
MEMORANDUM FOR:
THE PRESIDENT
FROM:
MIKE DUVAL
SUBJECT:
Telephone Call to President-Elect
Carter Concerning Government
Salary Increases.
Attached at TAB A are detailed talking points. The following is a summary
of the points we recommend you make:
I understand you have seen the salary levels I expect to
recommend. Do you agree?
I intend to link the increases to a recommendation that
each branch adopt a strengthened code of conduct.
May I state publicly that you concur with this approach?
See TAB B for materials from Jim Lynn.
TAB A
THE WHITE HOUSE
WASHINGTON
RECOMMENDED TELEPHONE CALL
FROM: MIKE DUVAL Whe
TO
: Jimmy Carter
SUBJECT
: Executive, Legislative and Judicial pay increases.
PURPOSE
: To receive President-elect Carter's personal support
for your decision to approve significant salary
increases for high officials in all three branches
linked to a commitment to a strengthened code of conduct.
TALKING POINTS
: 1. I have reached some conclusions concerning the
Peterson Commission report on Executive, Legislative
and Judicial Salaries.
I intend to submit my recommendations to the Congress
along with my budget on Monday the 17th. I concur
with the Commission's conclusion that there should be
a substantial salary increase linked to a strengthening
of the code of conduct for all three branches. If I
make such a recommendation, it will require your support
to be implemented.
2. I'd like to go over some of the specific elements of
the recommendation I intend to make.
First, I believe you have a copy of my proposed salary
increases. I understand that you agree with these
proposed increases. I have now filled out the list
by adding all jobs covered by the Quadrennial Commission
statute. I understand that Bert Lance has advised you
of these additional figures.
[I agree with the Commissions' suggestion that the
Congress deal with the cost of living adjustments
problem in separate legislation. My recommendation
will take no position on this issue.]
Page 2
Second, I am strongly of the opinion that the code
of conduct should be strengthened for all three branches,
particularly the Congress. I intend to endorse the
principles stated in the Peterson Commission Report
such as full public disclosure, rigorous restrictions
on outside income, strict conflict of interest provisions,
and reform of expense allowances.
[NOTE: This list omits post-service employment rules.
The Peterson Report only calls for limitations on
arrangements for post-service employment made while
in public employment and for consistent and explicit
rules among all branches. Carter went beyond this by
proposing what appears to be strict limitations for
two years following government service.]
Because of the principle of separation of powers, I
will recommend that each branch adopt its own rules and
enforcing mechanisms in accordance with the general
principles identified in the Peterson Report.
Third, I believe that the salary increases should be
accepted by the Congress only if there is a firm
commitment to the stronger code of conduct.
Accordingly, I will recommend that each House pass a
resolution before the pay increase takes effect,
expressly commiting to the establishment of a new code
of conduct.
3. I would like to use the following sentence in my public
statement on this subject:
"I have personally discussed the matter
with President-elect Carter and he
supports my recommendations concerning
salary levels and the need for stronger
codes of conduct for all three branches."
TAB B
Present
Peterson
Lynn
*
**
V.P.
65,600
80,000
75,000
(6)
(14,400)
22%
(10)
(7)
(9,400)
14.3% : (6)
C.J.
65,600
80,000
75,000
(6)
(14,400)
22%
(10)
(7)
(9,400)
14.3% (6)
Speaker
65,600
80,000
75,000
(6)
(14,400)
22%
(10)
(7)
(9,400)
14.3% (6)
Assoc. J.
63,000
77,500
72,000
(5)
(14,500)
23%
(9)
(8)
(9,000)
14.3% (6)
Exec. I
63,000
67,500
66,000
(11)
(4,500)
7.1%
(11)
(9)
(3,000)
4.8%
(7)
Pres. Pro Tem.
52,000
65,000
65,000
(8)
(13,000)
25%
(8)
(1)
(13,000)
25%
(5)
Appeals J.
44,600
65,000
57,500
(1)
(20,400)
45.7%
(2)
(2)
(12,900)
28.9%
(2)
Dist. J.
42,000
62,000
54,500
(2)
(20,000)
47.6%
(1)
(3)
(12,500)
29.8% (1)
Exec. II
44,600
60,000
57,500
(3)
(15,400)
34.5%
(4)
(2)
(12,900)
28.9%
(2)
Sen. & Reps.
44,600
57,500
57,500
(9)
(12,900)
28.9%
(4)
(2)
(12,900)
28.9%
(2)
Exec. III
42,000
57,000
52,500
(4)
(15,000)
35.7%
(3)
(4)
(10,500)
25%
(5)
Exec. IV
39,900
53,000
50,000
(7)
(13,100)
32.8%
(5)
(5)
(10,100)
25.3%
(4)
Exec. V
37,800
49,000
47,500
(10)
(11,200)
29.6%
(6)
(6)
(9,700)
25.7%
(3)
* Ranking by amount of increase
** Ranking by percentage increases
January 7, 1977
RECOMMENDATIONS FOR EXECUTIVE, LEGISLATIVE,
AND JUDICIAL SALARIES
As required by section 225 of the Federal Salary Act of 1967,
Public Law 90-206 (2 U.S.A 351 et seq.), the Commission on Execu-
tive, Legislative, and Judicial Salaries has submitted to the President
recommendations on salaries for Senators, Representatives, Federal
judges. Cabinet officers, and other agency heads, and certain other
officials in the executive. legislative, and judicial branches.
The statute requires the President. in the budget next submitted
by him after receipt of the report of the Commission, to set forth his
recommendations for adjustment of these salaries. Under the statute,
the President's recommendations become effective 30 days following
transmittal of the budget, unless in the meantime other rates have
been enacted by law or at least one House of Congress has
enacted legislation which specifically disapproves all or part of the
recommendations.
is
being
lem The has Commission concluded report that has its been recommendations curerum reviewed concerning whil the salary Pren-
reserated.
levels sice appropriate.
Accordingly, pursuant to section 225(h) of Public Law 90-206
(81 Stat. 644), the President recommends the following rates of pay
for executive, legislative, and judicial offices and positions within the
purview of subparagraphs (A), (B), (C), and (D) of subsection (f)
of that section:
For the Vice President of the United States
$75,000
For offices and positions under the Executive Schedule in subchapter II
of chapter 53 of title 5, United States Code, as follows:
Positions at level I
66,000
Positions at level II
57,500
Positions at level III
52,500
Positions at level IV
50,000
Positions at level V
47,500
For Speaker of the House of Representatives
75,000
For the President Pro Tempore of the Senate, majority leader and
minority leader of the Senate, and majority leader and minority
leader of the House of Representatives
65,000
For Senators, Members of the House of Representatives, Delegate to
the House of Representatives and the Resident Commissioner from
Puerto Rico
57,500
For other officers and positions in the legislative branch as follows:
Comptroller General of the United States
57,500
Deputy Comptroller General of the United States
52,500
The Public Printer, Librarian of Congress, Architect of the Capitol,
and General Counsel of the General Accounting Office
50,000
The Deputy Public Printer, Deputy Librarian of Congress, and
Assistant Architect of the Capitol
47,500
For Justices, judges and other personnel in the judicial branch as follows:
Chief Justice of the United States
75,000
Associate Justices of the Supreme Court
72,000
Judges, Circuit Court of Appeals: judges, Court of Claims; judges,
Court of Military Appeals; judges, Court of Customs and Patent
Appeals
57,500
Judges, District Courts; judges, Customs Court; judges, Tax Court of
the United States
54,500
Director of the Administrative Office of the U.S. Courts
54,500
Deputy Director of the Administrative Office of the U.S. Courts;
Commissioners, Court of Claims; referees in bankruptcy, full time
(maximum)
50.00g
48,500
Referees in bankruptcy part time (maximum)
24,200
There recommendations
recommendations of the Commission on Executive, Legisla-
or well as
tive, and Judicial Salaries concerning ethical standards of conduct
be
addressed
in
a
sensite
message
are
the Congress by the President.
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
January 13, 1977
MEMORANDUM FOR THE PRESIDENT
FROM:
James T. Lynn
SUBJECT:
Pay Raises
I have discovered that the Peterson Commission Report raises
two additional issues that must be decided.
Under the current law, the Director of the Administrative
Office of the U.S. Courts is paid the same amount as a District
Court Judge and Executive Level III. As you recall and can
note from the attached schedule we have already gone over, a
District Court Judge goes up under your recommendation $2,000
more than Executive Level III does. The Commission Report
recommends keeping the Director at the Level III level rather
than moving it to the proposed District Judge level.
There is a 1967 statute which linked the Director with the
District Judge. However, notwithstanding the opinion of the
General Counsel of the Administrative Office of the U.S. Courts,
the Office of Legal Counsel in Justice and the OMB General
Counsel concur that the Quadrennial Commission law passed at
the same time but to become operative two years later superseded
the narrower statute and therefore the Commission and/or the
President can unlink the two.
I think it is a close call. Peterson tells me they really
didn't focus on the issue. Under the Commission recommendations,
the District Judge went up to $62,000 and if they had kept the
linkage between the Director and the Judges at that figure
the Director would be making even more than Executive Level II.
On the other hand, at the lower District Judge level in the
"Lynn" column, $54,500, the Director at that level would be
making somewhat more ($2,000) than a Level III but still less
($3,000) than a Level II, and whether or not the 1967 statute
has been superseded it at least expressed the will of the
Congress at that time that the Director and the District Judge
should be linked. Also, as Phil Buchen points out, the
Director has a financial management role over the judges, and
it is appropriate that he be paid on a "peer group" basis.
-2-
On the other hand, District Judges are asked to serve for
life and the Director serves at the pleasure of the Supreme
Court. This weighs in the opposite direction -- toward
keeping the Director at Level III rather than the higher
District Judge level.
Phil Buchen and I concur that it would be better to stick
to the approach of the Congress and thus to continue the
linkage of the Director with the District Judges ($54,500)
rather than with Executive Level III ($52,500).
Decision:
Director continues linkage with
Executive Level III - $52,500
(increase of $10,500 - 25%)
or
Director continues linkage
with District Judge at $54,500
(increase of $12,500 - 29.8%)
net
(Recommended)
The second issue involves three positions presently paid
the same: the Commissioners of the Court of Claims, the
Deputy Director of the Administrative Office of the U.S.
Courts, and full-time bankruptcy referees. Under current
pay schedules these positions (hereinafter for brevity
called "the Three"), as well as Executive Level V, the
Deputy Librarian of Congress, the Deputy Public Printer
and the Assistant Architect of the Capitol all receive the
same amount of money. In the Peterson Report, the Three
are all moved up from the Level V rate to the Level IV
rate (which also includes the General Counsel of the GAO, the
Librarian of Congress, the Public Printer and the Architect of
the Capital). The other previously named positions remain at
the Level V under the Peterson Report. In this connection,
it should be noted that the Deputy Director of the Administrative
Office of the U.S. Courts was tied to Level V by the 1967 pre-
Commission statute mentioned above. Just as the Commission's
recommendation broke the 1967 statute linkage by recommending
pay for the Director of the Administrative Office lower than
the District Court Judge, it also broke such linkage by
recommending pay for the Deputy that is higher than a Level V.
Peterson tells me they really didn't focus on this issue either.
I am inclined to go along with the Commission report concept
of moving the Three up towards Level IV from the Level V
inasmuch as, at least for the Deputy Director, I can't see
-3-
a good reason why he should be the equivalent of two or
more Executive Levels lower than the Director. However,
raising the Three to a Level IV would result in the biggest
percentage pay increase in the whole schedule, 32.3%. If
we give them $48,500 (a new category in the schedule), the
percentage increase would be 28.3%, which is slightly less
of an increase than Congress and District and Appeals
Judges get but $1,000 more than they would get at Executive
Level V. If we gave them $48,000 ($500 more) the percentage
increase would be 27%. Phil and I opt for the $48,500.
Decision on Court of Claims Commissioners,
Deputy Director of the Administrative Office of
the U.S. Courts and bankruptcy referees:
As Peterson Commission proposes, break
linkage with V and move to IV -- $50,000
(32.3% increase)
Break linkage with existing Executive Levels
entirely to come out between Executive Level
IV ($50,000) and Executive Level V ($47,500) --
$49,000 (29.6%)
Same theory as preceding item but go to
$48,500 (28.3%). Recommended
NR7
Same but go to $48,000 (27%)
Stay at Level V, $47,500 (25.7%)
THE PRESIDENT has SEEN
THE WHITE HOUSE
WASHINGTON
January 13, 1977
* *MEMORANDUM OF TELEPHONE CONVERSATION
The
DATE:
January 13, 1977 (Thursday) 3:06 p.m.
PARTICIPANTS: President Ford, Governor Carter
Exchange of pleasantries.
The President pointed out, as he had said last night,
that he wanted the Transition to proceed smoothly and
quickly and said his people who had worked with the
Governor's people were very complimentary of them.
(Carter Comments)
Told the Governor he wanted to talk about the Petersen
Report. There was a need for the country that high
level people be adequately compensated. He wanted to
submit figures as part of the budget on Monday and he
did not want this to be a pro forma act but something
he wanted achieved. However, he recognized there was
a certain temerity in Congress about voting themselves
a pay increase. The President pointed out that he and
the Governor could work together on some figures and
we can stiffen the spines of some of those on the Hill.
The President also pointed out if the Governor agreed,
and endorsed what he wanted to do, plus giving him the
right to say he consulted with Carter and if he agrees,
then together they could get it through the Congress
(Carter Comments)
The President said he understood Lance and Lynn had
been working together on this and that Lynn speaks
very highly of Lance and he would like to meet him
sometime
(Carter comments)
"Thank you Governor very much" for something that he
said in response and moved into a discussion of the
Only the President and the President-elect were on
the phone. This telcon was drawn from the Ford
side of the conversation only.
-2-
proposed Code. Emphasized the need for the establish-
ment of a Code of Standards being implemented in all
three branches
(Carter comments)
President made a comment that he was going to refer to
what the Petersen Report said about a Code for the
three branches
(Carter comments)
Gave an affirmative response to something Carter said
and commented that they do vary some in the dollar
figures. (This comment was apparently in reference to
the figures in the Petersen Report.) The President
said he endorsed the Code and added that if he could
say when he makes a statement that he and Carter
agree on the Code of Standards question at the time
he speaks on the proposed pay figures, it would be
most helpful
(Carter comments)
The President in response to something Carter said,
said he will incorporate both
(Carter comments)
In response to a pleasantry, the President indicated
he would be in touch with the Governor from time to
time as something came up and closed the conversation
with a comment that he would see the Governor on
Thursday.
After the President hung up the phone, he summarized
the conversation to me by indicating the Governor had
said he would go along with the President's proposal
on the pay increase as well as support his call for
a Code of Conduct.
As a further comment, the President made clear in his
conversation with Carter that he planned to refer to the
conversation and point out that he had consulted
with the Governor and the Governor concurred.
On a different subject, apparently the President-elect
indicated he would be in touch with the President from
time to time. The President responded saying he
would see the Governor on Thursday.
&1/17/97
THE WHITE HOUSE
WASHINGTON
being delenered
early 1/18
Dear Mr. Chairman:
I am writing to you about a matter of unfinished business
which I believe deserves the early consideration of the
Congress.
As you know, the Quadrennial Commission on Executive,
Legislative and Judicial Salaries recently issued a
comprehensive report which covered a wide range of problems
in the present system of Federal compensation. In a
discussion of existing, serious anomalies in the Federal
pay structure, the Quadrennial Commission stated:
"By any standard, the Chairman of the Federal
Reserve Board has responsibilities that one could
argue are roughly equivalent to the Secretary of
the Treasury. His position has many aspects of a
career job - given the fourteen year tenure. Thus,
it does not offer the prospect of a short government
career. The internal relationships within the
"government" banking institutions are more than
anomalous. They are incomprehensible. The President
of the New York Federal Reserve Bank is paid $97,500
versus the $44,600 Level II salary of the Chairman
of the Federal Reserve Board.
An equally irrational classification result is the
enormously important job of Director of the Office
of Management and Budget who constantly negotiates
with Cabinet members on critical budget matters on
behalf of the President, yet is still classified as
Level II; i.e., at the level of an Undersecretary."
I would urge that immediate steps be taken to correct these
two serious defects in the classification structure.
With regard to the Federal Reserve Board:
-- Those who control our monetary policy have a
more pervasive impact on the economy and society
as a whole on a day-to-day basis than any other
comparable group in any department or agency.
showed to Caranaugh
+ anch
2
-- The Federal Reserve Board has an extraordinary
set of conflict of interest rules. Unlike
other members of the government, its members
are even barred from investing in government
bonds. There are also existing, severe
constraints on the jobs that can be accepted
upon departure from the Board.
-- Historically, the Chairman of the Board and
the members of the Board were paid at the
Cabinet level. In 1949, however, the Congress
reduced the Board's pay levels.
Action should be taken to restore the position of Chairman
of the Federal Reserve Board to a Level I and the members
of the Board should be raised to Level II.
With regard to the Director of OMB, the issue is simply
whether all Cabinet officers subject to Senate
confirmation should receive the same pay. I believe the
answer to this question is unequivocally and categorically
in the affirmative. The Congressional hearings on PL 93-250
of 1974 indicate that the Congress, when it required Senate
confirmation for the Director and Deputy Director of OMB,
considered the position of Director to be comparable in
importance to other members of the Cabinet whose appointments
are subject to Senate confirmation.
I would urge that immediate action be taken on making the
Director of OMB Level I and the Deputy Director Level II.
I trust you will accept these recommendations in the spirit
in which they are made.
With warm regards.
Sincerely,
Honorable Jack Brooks
Chairman
Committee on Government Operations
House of Representatives
Washington, D. C. 20515
THE WHITE HOUSE
WASHINGTON
Dear Mr. Chairman:
I am writing to you about a matter of unfinished business
which I believe deserves the early consideration of the
Congress.
As you know, the Quadrennial Commission on Executive,
Legislative and Judicial Salaries recently issued a
comprehensive report which covered a wide range of problems
in the present system of Federal compensation. In a
discussion of existing, serious anomalies in the Federal
pay structure, the Quadrennial Commission stated:
"By any standard, the Chairman of the Federal
Reserve Board has responsibilities that one could
argue are roughly equivalent to the Secretary of
the Treasury. His position has many aspects of a
career job - given the fourteen year tenure. Thus,
it does not offer the prospect of a short government
career. The internal relationships within the
"government" banking institutions are more than
anomalous. They are incomprehensible. The President
of the New York Federal Reserve Bank is paid $97,500
versus the $44,600 Level II salary of the Chairman
of the Federal Reserve Board.
An equally irrational classification result is the
enormously important job of Director of the Office
of Management and Budget who constantly negotiates
with Cabinet members on critical budget matters on
behalf of the President, yet is still classified as
Level II; i.e., at the level of an Undersecretary."
I would urge that immediate steps be taken to correct these
two serious defects in the classification structure.
With regard to the Federal Reserve Board:
-- Those who control our monetary policy have a
more pervasive impact on the economy and society
as a whole on a day-to-day basis than any other
comparable group in any department or agency.
2
-- The Federal Reserve Board has an extraordinary
set of conflict of interest rules. Unlike
other members of the government, its members
are even barred from investing in government
bonds. There are also existing, severe
constraints on the jobs that can be accepted
upon departure from the Board.
-- Historically, the Chairman of the Board and
the members of the Board were paid at the
Cabinet level. In 1949, however, the Congress
reduced the Board's pay levels.
Action should be taken to restore the position of Chairman
of the Federal Reserve Board to a Level I and the members
of the Board should be raised to Level II.
With regard to the Director of OMB, the issue is simply
whether all Cabinet officers subject to Senate
confirmation should receive the same pay. I believe the
answer to this question is unequivocally and categorically
in the affirmative. The Congressional hearings on PL 93-250
of 1974 indicate that the Congress, when it required Senate
confirmation for the Director and Deputy Director of OMB,
considered the position of Director to be comparable in
importance to other members of the Cabinet whose appointments
are subject to Senate confirmation.
I would urge that immediate action be taken on making the
Director of OMB Level I and the Deputy Director Level II.
I trust you will accept these recommendations in the spirit
in which they are made.
With warm regards.
Sincerely,
Honorable Abraham Ribicoff
Chairman
Committee on Government Operations
United States Senate
Washington, D. C.
20510
THE WHITE HOUSE
WASHINGTON
Dear Mr. Chairman:
I am writing to you about a matter of unfinished business
which I believe deserves the early consideration of the
Congress.
As you know, the Quadrennial Commission on Executive,
Legislative and Judicial Salaries recently issued a
comprehensive report which covered a wide range of problems
in the present system of Federal compensation. In a
discussion of existing, serious anomalies in the Federal
pay structure, the Quadrennial Commission stated:
"By any standard, the Chairman of the Federal
Reserve Board has responsibilities that one could
argue are roughly equivalent to the Secretary of
the Treasury. His position has many aspects of a
career job - given the fourteen year tenure. Thus,
it does not offer the prospect of a short government
career. The internal relationships within the
"government" banking institutions are more than
anomalous. They are incomprehensible. The President
of the New York Federal Reserve Bank is paid $97,500
versus the $44,600 Level II salary of the Chairman
of the Federal Reserve Board.
An equally irrational classification result is the
enormously important job of Director of the Office
of Management and Budget who constantly negotiates
with Cabinet members on critical budget matters on
behalf of the President, yet is still classified as
Level II; i.e., at the level of an Undersecretary."
I would urge that immediate steps be taken to correct these
two serious defects in the classification structure.
With regard to the Federal Reserve Board:
-- Those who control our monetary policy have a
more pervasive impact on the economy and society
as a whole on a day-to-day basis than any other
comparable group in any department or agency.
2
-- The Federal Reserve Board has an extraordinary
set of conflict of interest rules. Unlike
other members of the government, its members
are even barred from investing in government
bonds. There are also existing, severe
constraints on the jobs that can be accepted
upon departure from the Board.
-- Historically, the Chairman of the Board and
the members of the Board were paid at the
Cabinet level. In 1949, however, the Congress
reduced the Board's pay levels.
Action should be taken to restore the position of Chairman
of the Federal Reserve Board to a Level I and the members
of the Board should be raised to Level II.
With regard to the Director of OMB, the issue is simply
whether all Cabinet officers subject to Senate
confirmation should receive the same pay. I believe the
answer to this question is unequivocally and categorically
in the affirmative. The Congressional hearings on PL 93-250
of 1974 indicate that the Congress, when it required Senate
confirmation for the Director and Deputy Director of OMB,
considered the position of Director to be comparable in
importance to other members of the Cabinet whose appointments
are subject to Senate confirmation.
I would urge that immediate action be taken on making the
Director of OMB Level I and the Deputy Director Level II.
I trust you will accept these recommendations in the spirit
in which they are made.
With warm regards.
Sincerely,
Honorable Henry S. Reuss
Chairman
Committee on Banking, Finance and Urban Affairs
House of Representatives
Washington, D. C.
20515
3
IDENTICAL LETTER SENT TO:
Honorable William Proxmire
Chairman
Committee on Banking, Housing and Urban Affairs
United States Senate
Washington, D. C. 20510
Honorable Jack Brooks
Chairman
Committee on Government Operations
House of Representatives
Washington, D. C. 20515
Honorable Abraham Ribicoff
Chairman
Committee on Government Operations
United States Senate
Washington, D. C. 20510